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Management of Multinational Corporations ( MNCS )

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Chapter 1 : Conceptual Background

Defining MNCs
Characteristics of MNCs
Types of MNCs
Growth of MNCs
Evolution of MNCs

A Theoretical Perspective

Internalization Theory
Oligopoly Theory
The Tariff-Jumping Hypothesis
Obsolescing Bargain Theory
The Three Models of Internationalization Strategy
Three Phase Internationalization Model.
Passive or Dependent Internationalization
Active and Independent Internationalization
Active and Cooperative Internationalization

Chapter Summary

Though there is no universally acceptable definition of MNCs they may be generally defined as companies that operate in more than one country and invest directly in operations instead of being involved in licensing, franchising, etc. The operations are not just confined to sales but also involve manufacturing and R&D. MNCs tend to be oligopolistic and dynamic in sensing and exploiting local opportunities.

The various subsidiaries of an MNC enjoy substantial autonomy in decision making, except in some critical areas, which are handled by the parent firm. MNCs can be vertically or horizontally integrated. They can also take the form of conglomerates, joint ventures, or strategic alliances. The growth of MNCs in the last few decades may be attributed to the revolution in information technology and the removal of restrictions on capital flows by several countries around the globe. Many theories have been framed to explain the evolution of MNCs.

Some of them are Internalization theory, Oligopoly theory, Tariff jumping hypothesis, Obsolescing theory and Internationalization theory. The Internationalization theory explains how a company develops gradually from an exporting firm to an independent MNC and finally becomes a transnational company.

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